Uppers

Downers

The Bottom Line

There's a reason Facebook appears on the top of so many career fantasy wish lists: they're a great employer that only take the cream of the crop.

About Facebook, Inc.

Facebook is the face of social media, for good and bad. The
social networking juggernaut, which continues to grow quickly even
as it struggles with public relations and other issues,
lets users share information, post photos and videos, play
games, and otherwise connect with one another through online
profiles. The site, which allows outside developers to build apps
that integrate with Facebook, boasts more than two billion monthly
active users. In addition to its namesake platform, Facebook owns
Instagram (photo/video sharing), Messenger and WhatsApp (instant
messaging and payments services), and Oculus (virtual reality
technology and content). The company generates revenue through
advertising; the US accounts for about 45% of total sales.

Operations

In addition to the more than 2 billion monthly Facebook users,
WhatsApp and Messenger together claim nearly 3 billion monthly
users and Instagram counts about 800 million monthly users.

Beyond these offerings, the company has investments in
longer-term technology initiatives such as artificial intelligence,
augmented and virtual reality, and connectivity efforts.

Geographic Reach

Global in its reach, Facebook generates about 55% of its revenue
from outside of the US. The majority of its international business
comes from customers located in western Europe, Australia, Brazil,
Canada, and China.

The company has offices and data center facilities located all
over the world.

Sales and Marketing

Facebook uses a global sales force in more than 40 offices
worldwide to attract and retain advertisers (advertising accounts
for nearly all of revenue). It also serves advertising customers
through a self-service ad platform.

Users have generally found the site through word-of-mouth, as
well as internal marketing efforts. Facebook spent $324 million on
its own advertising and promotional expenses during 2017, compared
to $310 million and $281 million in 2016 and 2015,
respectively.

Financial Performance

Facebook has experienced exponential growth over the past few
years, enabling it to dominate the social networking world as the
most trafficked site of its kind in the US. Its revenue has
grown from nearly $8 billion to more than $40 billion since 2013
while its net income has grown from $1.5 billion to $16
billion.

In 2017 the company reported revenue of $40.6 billion, up nearly
50% from the prior year. Monthly active users grew nearly 15% and
the average price per ad increased by about 30%.

Net income that year hit $16 billion, up 55% year-over-year, on
the jump in revenue.

Cash at the end of 2017 was $8 billion, a decrease of $824
million from the prior year. Cash from operations contributed $24
billion to the coffers, while investing activities used $20
billion, mainly for purchases of marketable securities. Financing
activities used another $5 billion for stock repurchase and taxes
related to net share settlement of equity awards.

Strategy

Facebook owes the bulk of its growth to its ability to lure more
and more visitors to its site and keeping them engaged. As a
result, the growth in Facebook's advertising business, driven by
mobile ads customized for individuals, has been staggering. The
company will continue to invest in and expand its service offerings
in an effort to keep growth strong as it grapples with both
internal and external issues, including new data protections in
Europe, which have driven away some 1 million users.

India is a particular region of interest for Facebook where in
early 2018 it successfully tested a beta version of its WhatsApp
payments feature. The company is also rolling out new video
features (including live video) and original video content through
Facebook Watch and continues to improve and enhance its Oculus
virtual reality hardware and software.

The company, however, has had to pivot in recent months to focus
more on privacy and security. It has suffered through several years
of negative press since it was discovered that the Facebook News
Feed included fake user accounts and millions of fraudulent stories
meant to impact the 2016 US election cycle. In addition, an outside
researcher was able to collect and use for political purposes data
on as many as 87 million users without Facebook's permission. The
company is under investigation by several government agencies and
has been criticized for its slow response to the issues. Debate
continues over how Facebook should handle misinformation on its
platform.

The change in strategy is already having an impact, at least
financially. In Q2 2018 the company said that security investments,
among other initiatives, will impact the company's profitability;
that, combined with slower than expected growth in Q2 (and
similar predictions for Q3 and Q4) wiped out some $150 billion in
Facebook's market value as its stock suffered its biggest one-day
drop.

Company Background

The firm was launched in 2004 by Harvard student Mark Zuckerberg
as an online version of the Harvard Facebook. (The name comes from
books of freshmen's faces, majors, and hometowns that are
distributed to students.) In 2012 Facebook began publicly trading
after filing one of the largest IPOs in US history.